Is it suitable for me?
Consider all your options
Drawing up a budget will help you work out how much cash you will need, and when you’ll need it. That way, your equity release plan can be tailored to your needs.
If you are considering using equity release to pay off a mortgage, there may be other solutions that could work better for you, so it’s important to get suitable advice. If you’re looking to use the cash for home improvements, it’s worth checking to see if you’d qualify for a local authority grant.
Discuss your plans with your family
Equity release is a potentially useful tool for raising money and can help bolster retirement income, pay for home improvements or provide cash to pass on to other family members while you’re still alive. As it will impact the amount of inheritance you leave to your family, it’s a good idea to talk it over with them before going ahead.
Drawdown lifetime mortgages provide flexibility
The drawdown type of lifetime mortgage has risen in popularity, as it gives homeowners the freedom to take a lump sum secured against their property whilst leaving some in reserve for access later, as and when needed.
This means they can opt to leave more of their equity intact to pass on to family as an inheritance. Interest accrues only on the money actually drawn down and on earlier interest.
A ‘no negative equity’ guarantee is a safeguard The guarantee is that the loan plus the interest can never exceed the value of the property. So if you move into care or die, your dependants or beneficiaries won’t be faced with extra debt.
A joint plan can protect your interests
A joint plan gives equal rights to either party to continue to live in a shared home if the other dies or needs to move into long-term care.
The plan with the lowest interest rate may not be the best
Plans come with a variety of features and benefits, and it’s important that your plan meets your needs. For instance, some allow borrowers to make monthly interest payments to avoid the interest rolling up.
Understand the costs
These vary from one provider to another and may include a set-up or administration fee, solicitors’ fees and, depending on the option you choose, surveyors’ fees for carrying out a valuation of your home.
Your benefits may be affected
If you receive means-tested benefits, your entitlement to them could be affected if your circumstances change and your income or savings increase. Seek advice on how to release equity without affecting your benefits.